- Annual Recurring Revenue increases 26% YoY to $53.3 million
- Subscription Revenue grows 30% YoY to $13.0 million
- Backlog grows 23% to $114.2
million
VANCOUVER, BC, Nov. 8, 2023
/CNW/ - Copperleaf Technologies Inc.
(TSX: CPLF)
("Copperleaf" or the "Company"), a provider of
enterprise decision analytics software solutions, today announced
financial results for the three and nine months ended September 30, 2023. All amounts are expressed in
Canadian dollars unless otherwise stated.
"Copperleaf's third quarter results demonstrated continued
momentum across all of our key financial metrics," said Paul
Sakrzewski, CEO of Copperleaf. "We delivered a 26% YoY increase
in Annual Recurring Revenue, drove a 30% YoY increase in
subscription revenue and ended the quarter with a record
$114.2 million backlog."
"Our third quarter performance underscores the effectiveness of
our industry-leading decision analytics software, the strength of
our refreshed operating model and the improved execution of our
team, despite continuing uncertain market conditions. During the
quarter, we made further progress on geographic and industry sector
expansion with the addition of one of the largest gas distribution
companies in the United States as
well as signing one of Brazil's
largest integrated power utilities, validating go-to-market
investments made in the region. Additionally, we continued to make
substantial progress across our Alliance and Partner Ecosystem.
In the third quarter we saw the commencement of co-operative
go-to-market activities with SAP under the Endorsed Apps program,
resulting in material incremental pipeline for 2024 and
beyond. These results highlight the significant value we
provide to our clients, as well as the sustained demand for the
innovative solutions Copperleaf provides," added
Mr. Sakrzewski.
"For the remainder of 2023, we will remain focused on executing
our go-to-market strategy while continuing to prudently manage
company expenses as we navigate uncertain economic conditions. We
anticipate that growth in ARR and pipeline for the remainder of the
year will be driven by ongoing refinement of our go-to-market
model, the maturation of our salesforce, and increasing partner
traction," Mr. Sakrzewski concluded.
Third Quarter 2023 Financial Highlights
(All Capitalized terms used but not defined in this press
release have the meanings ascribed to them in Management's
Discussion and Analysis for the three and nine months ended
September 30, 2023; Comparison
periods in each case are the three months ended September 30, 2022, unless otherwise
stated)
- Revenue of $19.9 million, an
increase of 10% compared to Q3 2022, driven by an increase in
subscription and perpetual and term-based license revenue partially
offset by a decrease in professional services revenue.
- Annual Recurring Revenue1 as at September 30, 2023 of $53.3 million, a 26% increase from $42.3 million as at September 30, 2022.
- Subscription revenue of $13.0
million, an increase of 30% over Q3 2022.
- Gross profit of $14.5 million
representing a Gross margin of 73%, a 9% increase from $13.3 million and 73% in Q3 2022.
- Adjusted EBITDA1 loss of $5.9
million, compared to Adjusted EBITDA1 loss of
$8.1 million in Q3 2022.
- Net loss of $5.2 million, or a
loss of $0.07 per basic and diluted
share, compared to a net loss of $7.5
million, or a loss of $0.11
per basic and diluted share, in Q3 2022.
- As of September 30, 2023, the
Company's Net Revenue Retention Rate1 was 111% compared
to 109% as of September 30,
2022.
- As of September 30, 2023,
Copperleaf's Revenue Backlog1 grew 23% to $114.2 million compared to $93.1 million as of September 30, 2022.
- Strong balance sheet with cash and cash equivalents of
$46.3 million, short-term investments
of $62.2 million, and long-term
investments of $20.0 million as at
September 30, 2023.
1 Please
refer to "Non-IFRS Measures" section of this press
release
|
Key Developments
- In Q3, Copperleaf made further progress on geographic and
industry sector expansion with the addition of one of the
USA's largest gas distribution
companies which materially extends our footprint in natural gas
distribution in the USA, as well
as the signing of one of Brazil's
largest integrated power utilities which represents another
important geographic expansion while establishing our beach-head in
Brazil.
- Further to the announcements in Q1 and Q2 regarding the
developing relationship with SAP under the Endorsed Apps program,
Q3 saw the commencement of cooperative go-to-market activities
resulting in material incremental pipeline for 2024 and beyond,
across all regions.
- Q3 also saw the deepening of Copperleaf's global relationship
with Accenture as they assigned a Global Partner Director to
programmatically coordinate joint go-to-market activities across
all regions.
- Verdantix published its inaugural "Green Quadrant" report on
AIP during Q3 with Copperleaf positioned as the clear leader in the
segment.
- As part of Copperleaf's ongoing commitment to best-in-class
cyber security standards, in Q3 the Company successfully completed
SOC 2 and ISO 27001 audits.
- In Q3, Copperleaf was granted a US patent for an advanced
software optimizer which enhances the Company's comprehensive asset
management capabilities to accommodate large numbers of assets,
across all stages of an asset's lifecycle. This patent highlights
Copperleaf's dedication to developing pioneering solutions that
facilitate better investment decisions.
- During Q3, Copperleaf released version 23.3 of its product
suite which included numerous new innovations including: new
modelling for complex asset relationships and asset interventions
in the Copperleaf Value Model Library (CVML); visualization of
Predictive Analytics asset strategies in our Interactive GIS
Experience option; and significant enhancements to our popular
Dashboard Library which empowers our clients to communicate their
value-based decision outcomes more effectively.
Q3 2023 Financial Results Conference Call
Details
Paul Sakrzewski, Chief Executive Officer and Chris Allen, Chief Financial and Operating
Officer, will host a conference call followed by a
question-and-answer session today, November
8, 2023, at 5:00 PM ET.
Date: November 8, 2023
Time: 5:00pm ET
Dial-In Number: 416-764-8659 or 1-888-664-6392
Webcast: https://app.webinar.net/MXGV4yL7Z5x
Replay: 416-764-8677 or 1-888-390-0541
(Available until November 15,
2023)
Replay Entry Code: 038919#
Key Performance Indicators
The Company monitors a number of key performance indicators
(KPIs) to evaluate performance. Some of the KPIs used by management
are recognized under IFRS, whereas others are non-IFRS measures and
are not recognized under IFRS. These non-IFRS measures are included
as additional information to complement the IFRS measures,
providing further understanding of our results of operations from
management's perspective. We believe that non-IFRS financial
measures are useful to investors and others in assessing our
performance; however, these measures should not be considered as a
substitute for reported IFRS measures nor should they be considered
in isolation. As these measures are not recognized measures under
IFRS, they do not have a standardized meaning prescribed by IFRS
and therefore may not be comparable to similar measures presented
by other companies. For a reconciliation of non-IFRS measures to
the most directly comparable measures calculated in accordance with
IFRS, see section "Non-IFRS Measures" below.
1Non-IFRS Measures
Annual Recurring Revenue ("ARR")
We define ARR as the annualized equivalent value of the
subscription and term-based software license revenue of all
existing contracts as at the date being measured, excluding
non-recurring SaaS and hosting fees. Our clients generally enter
into three-to-five-year contracts that are non-cancelable or
cancelable with penalty. Our calculation of Annual Recurring
Revenue assumes that clients will renew the contractual commitments
on a periodic basis as those commitments come up for renewal.
Subscription and term-based software license agreements are subject
to price increases upon renewal reflecting both inflationary
increases and the additional value provided by our solutions. In
addition to the expected increase in subscription and term-based
software license revenue from price increases over time, existing
clients may subscribe for additional products or services during
the term. We believe that this measure provides a fair real-time
measure of performance in a subscription-based environment.
Net Revenue Retention Rate
We believe that our Net Revenue Retention Rate is a key measure
to provide insight into the long-term value of our clients and our
ability to retain and expand revenue from our client base over
time. Our Net Revenue Retention Rate is calculated over a trailing
twelve-month period by considering the group of clients on our
platform as of the beginning of the period and dividing our Annual
Recurring Revenue attributable to this same group of clients at the
end of the period by the Annual Recurring Revenue at the beginning
of the period. By implication, this ratio excludes any Annual
Recurring Revenue from new clients acquired during the period but
does include incremental sales added to the cohort base of clients
during the period being measured. This measure provides insight
into client expansions, downgrades, and churn, and illustrates the
growth potential of our client base alone. Our success in
delivering exceptional value and extraordinary experiences to our
clients is fully realized when we can achieve a high Net Revenue
Retention Rate. However, this percentage can vary from period to
period due to the timing of large expansion contracts with our
existing clients. In addition, only the recurring component
of expansions with our perpetual license clients, such as on-going
support & maintenance, is recognized in this calculation.
Revenue Backlog
Revenue Backlog represents the total revenue expected to be
recognized in the future, related to performance obligations that
are unsatisfied or partially unsatisfied at period end. The
recurring nature of our revenue provides high visibility into
future performance, and upfront payments result in cash flow
generation in advance of revenue recognition. Subscription
contracts require annual upfront payments; however, some clients
pay multiple years upfront. Roughly 50% to 75% of our expected
annual revenue is recognized from client contracts that are in
place at the beginning of the year; however, this percentage will
vary year over year and we expect this percentage to generally
increase going forward as our client base continues to transition
toward SaaS and our Q4 seasonality persists. Agreements with new
clients or agreements with existing clients purchasing incremental
product and services in a quarter may not contribute significantly
to revenue in the current quarter. For example, for SaaS contracts
and professional services, a new client who enters into an
agreement late in a quarter will typically have limited
contribution to the revenue recognized in that quarter. Software
licenses, by contrast, are often recognized as revenue upon
delivery of the software which typically occurs immediately upon
contracting, and thus rarely enters Revenue Backlog.
Adjusted EBITDA
Adjusted EBITDA is used by management as a supplemental measure
to review and assess operating performance and to provide a more
complete understanding of factors and trends affecting our
business. Management believes that Adjusted EBITDA is a useful
measure of operating performance and our ability to generate
cash-based earnings, as it provides a more relevant picture of
operating results by excluding the effects of financing and
investing activities, including removing the effects of interest
and other expenses such as non-cash items and non-recurring
expenses that are not reflective of our underlying business. In
addition to interest, the other non-cash or non-recurring items
adjusted for include depreciation and amortization, share-based
payments expense, foreign exchange loss (gain), current income tax
expense (recovery), and CEO transition expenses. Our management
also uses Adjusted EBITDA in order to facilitate operating
performance comparisons and decision making from period to period
and to prepare annual operating budgets and forecasts. In addition,
it is used to provide securities analysts, investors, and other
interested parties with supplemental measures of our operating
performance and thus highlight trends in our business that may not
otherwise be apparent when relying solely on IFRS measures.
The following tables reconciles Adjusted EBITDA to net loss for
the periods indicated:
|
Three months
ended
September
30,
|
Nine months
ended
September 30,
|
|
(in thousands, except
percentages)
|
|
2023
$
|
2022
$
|
Change
%
|
2023
$
|
2022
$
|
Change
%
|
Net
loss
|
(5,237)
|
(7,502)
|
30 %
|
(29,633)
|
(25,834)
|
(15 %)
|
Depreciation and
amortization
|
464
|
490
|
(5 %)
|
1,412
|
1,643
|
(14 %)
|
Share-based payments
expense 1
|
993
|
1,194
|
(17 %)
|
3,952
|
3,109
|
27 %
|
Finance
costs
|
274
|
239
|
15 %
|
861
|
774
|
11 %
|
Finance and other
income
|
(1,471)
|
(860)
|
(71 %)
|
(4,343)
|
(1,563)
|
(178 %)
|
Foreign exchange (gain)
loss
|
(949)
|
(1,434)
|
34 %
|
434
|
(960)
|
(145 %)
|
Current income tax
expense (recovery)
|
60
|
(195)
|
(131 %)
|
158
|
(61)
|
(359 %)
|
CEO transition expenses
1
|
-
|
-
|
-
|
695
|
-
|
100 %
|
Adjusted
EBITDA
|
(5,866)
|
(8,068)
|
27 %
|
(26,464)
|
(22,892)
|
(16 %)
|
1 Expenses incurred in the
transition to our new CEO in 2023, which are non-recurring. CEO
transition costs include share-based payments expense of $169 due
to the modification of certain stock options.
|
Selected Financial Information
Consolidated Statements of Loss and Comprehensive
Loss
(expressed in thousands of Canadian dollars, except for
share and per share amounts)
|
|
Three months
ended
September 30,
|
Nine months
ended
September 30,
|
|
|
2023
|
2022
|
2023
|
2022
|
|
|
$
|
$
|
$
|
$
|
Revenue
|
|
19,888
|
18,061
|
58,358
|
54,214
|
|
|
|
|
|
|
Cost of
revenue
|
|
5,417
|
4,787
|
17,458
|
14,025
|
|
|
|
|
|
|
Gross
profit
|
|
14,471
|
13,274
|
40,900
|
40,189
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
Sales and
marketing
|
|
8,832
|
9,639
|
29,152
|
27,668
|
Research and
development
|
|
7,608
|
6,797
|
26,347
|
20,822
|
General and
administrative
|
|
5,354
|
6,590
|
17,924
|
19,343
|
|
|
21,794
|
23,026
|
73,423
|
67,833
|
|
|
|
|
|
|
Loss from
operations
|
|
(7,323)
|
(9,752)
|
(32,523)
|
(27,644)
|
|
|
|
|
|
|
Other expense
(income)
|
|
|
|
|
|
Finance
costs
|
|
274
|
239
|
861
|
774
|
Finance and other
income
|
|
(1,471)
|
(860)
|
(4,343)
|
(1,563)
|
Foreign exchange (gain)
loss
|
|
(949)
|
(1,434)
|
434
|
(960)
|
|
|
(2,146)
|
(2,055)
|
(3,048)
|
(1,749)
|
|
|
|
|
|
|
Loss before income
taxes
|
|
(5,177)
|
(7,697)
|
(29,475)
|
(25,895)
|
|
|
|
|
|
|
Income
taxes
|
|
|
|
|
|
Current income tax
expense (recovery)
|
|
60
|
(195)
|
158
|
(61)
|
|
|
|
|
|
|
Net loss and
comprehensive loss for the period
|
|
(5,237)
|
(7,502)
|
(29,633)
|
(25,834)
|
|
|
|
|
|
|
Net loss per share
basic and diluted
|
|
(0.07)
|
(0.11)
|
(0.41)
|
(0.37)
|
Weighted average
number of common shares
outstanding, Basic
and diluted
|
|
72,718,471
|
69,456,304
|
71,879,641
|
69,316,506
|
Consolidated Statements of Financial
Position
(expressed in thousands of Canadian Dollars)
|
|
September 30,
2023
|
December 31,
2022
|
|
|
$
|
$
|
ASSETS
|
|
|
|
Current
assets
|
|
|
|
Cash and cash
equivalents
|
|
46,279
|
149,458
|
Short-term
investments
|
|
62,218
|
-
|
Accounts
receivable
|
|
17,151
|
21,232
|
Contract
costs
|
|
1,086
|
852
|
Contract
assets
|
|
3,770
|
4,337
|
Prepaid
expenses
|
|
2,916
|
3,050
|
|
|
133,420
|
178,929
|
Non-current
assets
|
|
|
|
Long-term
investments
|
|
20,000
|
-
|
Deposit and prepaid
expenses
|
|
367
|
702
|
Contract
costs
|
|
1,475
|
1,566
|
Contract
assets
|
|
-
|
458
|
Property and
equipment
|
|
1,297
|
1,901
|
Intangible
assets
|
|
1,200
|
1,407
|
Right-of-use
assets
|
|
2,183
|
730
|
|
|
26,522
|
6,764
|
TOTAL
ASSETS
|
|
159,942
|
185,693
|
|
|
|
|
LIABILITIES
|
|
|
|
Current
liabilities
|
|
|
|
Accounts payable and
accrued liabilities
|
|
13,752
|
12,232
|
Contract
liabilities
|
|
25,868
|
28,098
|
Lease
liabilities
|
|
506
|
1,039
|
|
|
40,126
|
41,369
|
Non-current
liabilities
|
|
|
|
Contract
liabilities
|
|
8,641
|
11,038
|
Lease
liabilities
|
|
2,015
|
259
|
|
|
10,656
|
11,297
|
TOTAL
LIABILITIES
|
|
50,782
|
52,666
|
|
|
|
|
SHAREHOLDERS'
EQUITY
|
|
|
|
Share
capital
|
|
187,558
|
183,778
|
Share-based payments
reserve
|
|
10,611
|
8,625
|
Deficit
|
|
(89,009)
|
(59,376)
|
TOTAL SHAREHOLDERS'
EQUITY
|
|
109,160
|
133,027
|
TOTAL LIABILITIES
AND SHAREHOLDERS' EQUITY
|
|
159,942
|
185,693
|
Disaggregation of revenue
(expressed in thousands of
Canadian Dollars, except percentages)
|
Three months
ended
September
30,
|
Nine months
ended
September
30,
|
|
2023
$
|
2022
$
|
Change
%
|
2023
$
|
2022
$
|
Change
%
|
|
(in thousands, except
percentages)
|
Subscription
1
|
12,979
|
10,016
|
30 %
|
35,943
|
28,608
|
26 %
|
Professional
services and custom
software
contracts 2
|
6,097
|
7,639
|
(20 %)
|
19,747
|
20,758
|
(5 %)
|
Perpetual
and term-based
software
licenses 3
|
812
|
406
|
100 %
|
2,668
|
4,848
|
(45 %)
|
|
19,888
|
18,061
|
10 %
|
58,358
|
54,214
|
8 %
|
1
Subscriptions represent revenue from software as a service
("SaaS"), support and maintenance services, and
hosting.
|
2
Professional services and custom software contracts represent
revenue earned substantially from professional services.
|
3 Perpetual
and term-based software licenses represent software licenses that
are client hosted or with the option for the client to
host.
|
Forward-Looking Statements
This news release contains "forward-looking information" and
"forward-looking statements" (collectively, "forward-looking
information") within the meaning of applicable securities laws in
Canada.
Forward-looking information may relate to our future business,
financial outlook, and anticipated events or results, and may
include information regarding our financial position, business
strategy, growth strategies, addressable markets, budgets,
operations, financial results, taxes, dividend policy, plans and
objectives. Particularly, information regarding our expectations of
future results, performance, achievements, prospects, or
opportunities, or the markets in which we operate, is
forward-looking information. In some cases, forward-looking
information can be identified by the use of forward-looking
terminology such as "plans", "targets", "expect" or "does not
expect", "is expected", "is poised to", "an opportunity exists",
"budget", "scheduled", "estimates", "outlook", "future", "financial
outlook", "forecasts", "projection", "prospects", "strategy",
"intends", "anticipates", "does not anticipate", "believes", or
variations of such words and phrases, or statements that certain
actions, events, or results "may", "could", "would", "might",
"will" occur or be taken , or "will continue to" or
"are poised to" be achieved. In addition, any statements that
refer to expectations, intentions, projections, or other
characterizations of future events or circumstances contain
forward-looking information. Statements containing forward-looking
information are not historical facts but instead represent
management's expectations, estimates and projections regarding
possible future events or circumstances.
Forward-looking information may include, among other things: (i)
the Company's expectations regarding its financial performance,
including among others, revenue, gross profit, expenses, Adjusted
EBITDA; (ii) the Company's expectations regarding industry trends,
addressable market growth, overall market growth rates, and growth
rates and growth strategies; (iii) our business plans and
strategies; (iv) the continued success of our commercial model; (v)
our expectations regarding growth in our customer base, our ability
to retain clients and increase margin per customer; (vi)
acceleration in the growth and adoption of new technologies; (vii)
relationships with our technology partners; (viii) our ability to
continue to attract and retain talent; (ix) our competitive
position in our industry; and (xi) and the long-term impact of
COVID-19 on our business, financial position, results of operations
and/or cash flows.
Forward-looking information is necessarily based on a number of
opinions, estimates and assumptions that we considered appropriate
and reasonable as at the date such statements are made, and are
subject to known and unknown risks, uncertainties, assumptions and
other factors that may cause the actual results, level of activity,
performance or achievements to be materially different from those
expressed or implied by such forward-looking information, including
but not limited to the risk factors described in our 2022 Annual
Information Form ("AIF") under "Risk Factors". A copy of the 2022
AIF can be accessed under our profile on the System for Electronic
Document Analysis and Retrieval ("SEDAR+")
at www.sedarplus.ca. There can be no assurance that such
forward-looking information will prove to be accurate, as actual
results and future events could differ materially from those
anticipated in such information. Accordingly, readers should not
place undue reliance on forward-looking information, which speaks
only as at the date made.
In addition, forward-looking financial information with respect
to potential outlook and future financial results contained in this
press release are based on assumptions about future events
including economic conditions, the assumptions noted above and
proposed courses of action, based on management's reasonable
assessment of the relevant information available as at the date of
such forward-looking information. Readers are cautioned that any
such forward-looking financial information should not be used for
purposes other than for which it is disclosed.
About Copperleaf:
Copperleaf (TSX:CPLF) provides enterprise decision analytics
software solutions to companies managing critical infrastructure.
We leverage operational and financial data to empower our clients
to make investment decisions that deliver the highest business
value. What sets us apart is our industry-leading products and our
commitment to providing extraordinary experiences, shaped by people
who care deeply and partnerships that stand the test of time.
Copperleaf is actively involved in shaping and implementing global
industry standards and sustainability principles through our
participation in the United Nations Global Compact, the Institute
of Asset Management, and other organizations. Headquartered in
Vancouver, Canada, our solutions
are distributed and supported by regional staff and partners
worldwide. Together, we are transforming how the world sees
value.
For more details, visit https://www.copperleaf.com/
For further information:
James Bowen, CFA
416-519-9442
investors@copperleaf.com
Source: Copperleaf Technologies Inc. CPLF-IR
SOURCE Copperleaf Technologies Inc.